PTC stock price target raised to $224 from $175 at RBC Capital

Investing.com - RBC Capital has raised its price target on PTC Inc. (NASDAQ:PTC) to $224.00 from $175.00 while maintaining an Outperform rating on the stock. The potential acquirer Autodesk (NASDAQ:ADSK) currently trades at a P/E ratio of 60.5x and maintains impressive gross profit margins of 92%, according to InvestingPro data.

The price target increase follows a Bloomberg report suggesting Autodesk could be considering acquiring PTC in a potential stock and cash deal. PTC shares jumped 18% on the news, reaching all-time highs, while Autodesk stock fell 2%. InvestingPro analysis shows Autodesk maintains a "GOOD" Financial Health score, with particularly strong profitability metrics.

RBC Capital noted the report comes amid recent consolidation in the design-based space, including Siemens (ETR:SIEGn)’ acquisition of Altair and Synopsys (NASDAQ:SNPS)’ pending acquisition of Ansys (NASDAQ:ANSS). The firm believes PTC is an attractive asset and wouldn’t be surprised if its board is exploring strategic alternatives.

The analyst firm suggested a combination of the two companies could make sense at the right price, with cost synergies being a key factor. RBC believes product overlap would be manageable, with PTC’s enterprise-grade manufacturing software complementing Autodesk’s focus on 3D design, engineering, infrastructure, and construction software.

RBC Capital indicated that PTC has traded at what it considers an unjustified discount to peers, suggesting the board may be exploring strategic alternatives to close this valuation gap.

In other recent news, Autodesk has reported a strong start to the year, with first-quarter results showing an 11% increase in constant-currency revenue growth, driven by robust activity in the Architecture, Engineering, Construction, and Operations sector. The company also exceeded expectations with free cash flow reaching $556 million and EBIT margins at 37%. Citi analyst Tyler Radke raised the price target for Autodesk to $376, citing strong performance and margin outperformance, while maintaining a Buy rating. Piper Sandler also adjusted its price target to $361, affirming an Overweight rating due to Autodesk’s promising financial results. Berenberg upgraded Autodesk from Hold to Buy, highlighting the potential for significant margin expansion and projecting a 16% compound annual growth rate in earnings. Meanwhile, BMO Capital maintained a Market Perform rating, noting stable customer demand trends and optimism about market share growth in construction-related workloads. Additionally, Morgan Stanley (NYSE:MS) reiterated its Overweight rating with a $370 price target, amidst unconfirmed reports of a potential acquisition of PTC, which could offer strategic benefits for Autodesk. These developments reflect a positive outlook from various analysts regarding Autodesk’s financial performance and strategic initiatives.

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